Passive income through option writing: Part 3

Back in 2016, I wrote a few posts on trading derivatives, especially options, to generate (mostly) passive income:

I’m still running that same strategy but it definitely evolved quite a bit over time. This might be a good time to write a quick update on what I’m doing and what I’ve changed since then. And for everyone who’s wondering what’s the use of this: I’m planning a future post on how selling options may help with Sequence Risk, so this is all very, very relevant even for folks in the FIRE crowd!

So, let’s take a look…

Continue reading “Passive income through option writing: Part 3”

Passive income through option writing: Part 2

All Parts of this series:

  • Part 1: Intro
  • Part 2: The strategy as implemented in 2016
  • Part 3: Some updates on the strategy as I’m currently running it as of 2019

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Last week we made the case for generating passive income through option writing. A quick recap of last week: buying puts to secure the downside of your equity investment is a bit like casino gambling: pay a wager (put option premium) for the prospect of winning a big prize (unlimited equity upside potential). Unfortunately, the average expected returns are also quite poor, just like when you gamble in the casino or buy lottery tickets.

Since we can’t beat the casino, let’s be the casino!

Being the casino means we act as the seller of put options. Let’s see how we implement this: Continue reading “Passive income through option writing: Part 2”

How to create a no-limit Synthetic Roth IRA in a taxable account

Tired of contributing a paltry $5,500 per year ($11,000 for couples) to your Roth? If you like to contribute more than that, why not find a way to generate returns in a taxable account that mimic those of a Roth IRA? Impossible, you say? Under very specific conditions it is possible to generate after-tax returns in a taxable account that replicate those of a Roth IRA. We call it the Synthetic Roth IRA. Continue reading “How to create a no-limit Synthetic Roth IRA in a taxable account”